Exit bans in China: What are they and why are they causing friction with US?

China has barred a Wells Fargo executive and a U.S. government employee from leaving the country, a move that casts renewed focus on Beijing’s opaque legal system. The exit bans arrive as China attempts to attract foreign investment while trade talks with the U.S. grow more delicate.

U.S. Officials Voice Concern

China’s Ministry of Foreign Affairs confirmed this week that Wells Fargo banker Mao Chenyue is under investigation and prohibited from leaving the country. Officials offered no further explanation but claimed she must cooperate with a criminal inquiry.

At the same time, China barred a U.S. Patent and Trademark Office employee from departing. The U.S. State Department said it is actively engaging Chinese officials to resolve the case.

“This is unbelievable,” said U.S. Commerce Secretary Howard Lutnick. “He went home and he was arrested, and they’re holding his passport.”

The employee has remained in China since mid-April and has reportedly faced questioning about his U.S. Army background.

The U.S. Embassy in Beijing stated that arbitrary exit bans disrupt diplomatic relations. “The Chinese government has, for many years, imposed exit bans on U.S. citizens and other foreign nationals… often without a clear and transparent process,” a spokesperson said.

The Broader Use of Exit Bans

James Zimmerman, a Beijing-based lawyer and former chair of the American Chamber of Commerce in China, said these bans are not new. Authorities use them to prevent suspects or witnesses from fleeing, he said, although political motives sometimes factor in.

“Most of the time, there is a legitimate legal basis,” Zimmerman said. “But there are also instances of misuse, especially for political reasons.”

Human rights groups estimate that more than 30 Americans currently face exit bans in China. Many Chinese citizens—including lawyers and activists—face similar restrictions.

Foreign nationals who work with state-owned enterprises (SOEs) are also at risk. In recent years, China’s anti-corruption agency has expanded investigations and has used exit bans to force cooperation, even from those indirectly connected to the cases.

National Security Laws Tighten

China has passed several laws to broaden its legal reach. In 2023, it amended its counterespionage law, allowing authorities to block Chinese and foreign nationals from leaving if they pose a perceived national security risk.

According to a report by Safeguard Defenders, tens of thousands of people may currently face exit bans. The group says this does not include large numbers of Tibetans and Uyghurs, who have long faced travel restrictions through passport denial or confiscation.

In a separate case last week, a Beijing court sentenced a Japanese pharmaceutical executive to over three years in prison for alleged espionage. The Japanese government called the sentence “deeply regrettable” and said it harms public sentiment and bilateral ties.

Business Confidence Dips

Foreign business leaders say each new exit ban deepens fears. A U.S. businessman in Beijing told reporters, under condition of anonymity, that such actions reduce travel confidence and threaten investment.

“Denials by the Foreign Ministry or lack of clear explanations only worsen the situation,” he said. “If people are afraid to visit China, investment will fall.”

William Yang, senior analyst at the International Crisis Group, said some Japanese companies have already scaled down operations in China. “This contradicts China’s goal of boosting investor confidence,” he said.

Foreign investment in China dropped 15.2% in the first half of 2025 compared to the same period last year, according to China’s Commerce Ministry.

Joe Mazur, a senior analyst at Trivium China, believes the bans will rattle global companies. “The uncertainty around these cases will make foreign firms cautious about sending employees to China,” he said. “It weakens overall business confidence.”

Impact on U.S.-China Relations

Despite the tensions, analysts believe the U.S. and China will continue working to ease trade tensions. “These cases may not reverse recent progress,” said Mazur. “There’s too much at stake.”

Still, analysts like Yang warn that the bans cast a shadow over planned diplomatic efforts, including a possible summit between leaders. “These exit bans complicate negotiations,” he said. “They make it harder to build trust between both countries.”

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